What is Mortgage Insurance?
Private mortgage insurance (PMI) is an insurance policy that protects a lender that gives a mortgage to someone who has less than 20% of the purchase price to put down when buying the home. In the event that you were to default on mortgage payments this insurance policy is a way to protect the lender’s investment.
The private mortgage insurance payments are made monthly in conjunction to your monthly mortgage payments. The cost of private mortgage insurance will vary depending the loan amount and the down payment. Here is an example:
If you purhcase a home that is $200,000 and you have $15,000 to put down (7.5% of the sale price) your monthly mortgage payment would be roughly $884.00 and the PMI cost would be an additional $111.00 for a total of $995/month for your mortgage and PMI. This example does not include the additional cost of taxes and property insurance.
How Can You Remove Private Mortgage Insurance?
The purpose of PMI is to protect the lender in the event that you have a small down payment to put towards a home purchase. But before entering into a loan with PMI it’s important to understand what needs to be done to have the PMI removed.
According to the obtain a pre-qualification and communicate how big you anticipate your down payment to be. They can explain your options and the most current private mortgage insurance facts.
At Title Mortgage we understand that not everyone has a 20% down payment towards their first home. That’s why we offer a variety of mortgage solutions for every type of buyer and we are committed to working closely with you to determine the best option for you! Contact us today at 603-643-1400.